1.1                          A bill for an act 
  1.2             relating to taxation; providing an income tax credit 
  1.3             for contributions to neighborhood assistance programs; 
  1.4             proposing coding for new law in Minnesota Statutes, 
  1.5             chapter 290. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [290.0681] [CREDIT FOR CONTRIBUTIONS TO 
  1.8   NEIGHBORHOOD ASSISTANCE PROGRAMS.] 
  1.9      Subdivision 1.  [CREDIT ALLOWED.] A taxpayer is allowed a 
  1.10  credit against the tax imposed by section 290.06, subdivision 1 
  1.11  or 2c, in an amount equal to 50 percent of the amount 
  1.12  contributed by the taxpayer during the taxable year to a 
  1.13  neighborhood organization for a neighborhood assistance program 
  1.14  that qualifies under this section. 
  1.15     Subd. 2.  [DEFINITIONS.] (a) "Community services" means 
  1.16  counseling and advice, emergency assistance, medical care, 
  1.17  recreational facilities, housing facilities, employment 
  1.18  placement, job training, or economic development assistance 
  1.19  provided to persons and families of low or moderate income as 
  1.20  defined in section 469.002, subdivisions 17 and 18, residing in 
  1.21  an economically disadvantaged area or to groups comprised of or 
  1.22  acting on behalf of those persons and families. 
  1.23     (b) "Economically disadvantaged area" means an area in the 
  1.24  state in which: 
  1.25     (1) ten percent of the population have annual incomes below 
  2.1   the federal poverty level; or 
  2.2      (2) there are one or more recognized subareas such as a 
  2.3   census tract, city, township, or county in which 15 percent of 
  2.4   the population have annual incomes below the federal poverty 
  2.5   level. 
  2.6      (c) "Employment placement" means providing services 
  2.7   relating to the recruitment, screening, counseling, supporting, 
  2.8   and retention in employment of individuals who reside in 
  2.9   economically disadvantaged areas, including the provision of 
  2.10  transportation to job sites. 
  2.11     (d) "Job training" means instruction to an individual who 
  2.12  resides in an economically disadvantaged area that enables the 
  2.13  individual to acquire vocational skills in order to become 
  2.14  employable or be able to seek a higher grade of employment. 
  2.15     (e) "Federal poverty level" means the income level 
  2.16  published annually by the United States Department of Health and 
  2.17  Human Services under authority of the Omnibus Budget 
  2.18  Reconciliation Act of 1981, Public Law Number 97-35, title VI, 
  2.19  section 673(2). 
  2.20     (f) "Neighborhood assistance" means: 
  2.21     (1) furnishing financial assistance, labor, material, and 
  2.22  technical advice by means of community services that aid in the 
  2.23  physical or economic improvement of any part or all of an 
  2.24  economically disadvantaged area; or 
  2.25     (2) furnishing technical advice to promote higher 
  2.26  employment in any neighborhood in the state. 
  2.27     (g) "Neighborhood organization" means any organization that:
  2.28     (1) performs community services: 
  2.29     (i) in an economically disadvantaged area; or 
  2.30     (ii) through a program that exclusively serves participants 
  2.31  who have incomes below the federal poverty level; and 
  2.32     (2) is exempt from taxation under section 501(c)(3) of the 
  2.33  Internal Revenue Code. 
  2.34     Subd. 3.  [PROGRAM QUALIFICATION.] The commissioner of 
  2.35  trade and economic development shall adopt rules defining the 
  2.36  qualification of neighborhood organizations consistent with the 
  3.1   definition in subdivision 2.  A neighborhood organization that 
  3.2   intends to qualify its programs for the tax credit must apply 
  3.3   each year to the commissioner of trade and economic development 
  3.4   for a certificate to operate a neighborhood assistance program.  
  3.5   The commissioner of trade and economic development shall notify 
  3.6   the commissioner of revenue regarding the identity of each 
  3.7   neighborhood organization that has been certified to accept 
  3.8   contributions that are eligible for the tax credit for the 
  3.9   following calendar year, by September 1 of each year.  The 
  3.10  commissioner shall give highest priority to qualifying 
  3.11  organizations that collaborate with each other or offer more 
  3.12  than one community service as defined in subdivision 2.  
  3.13  Contributions to a neighborhood organization that performs 
  3.14  community services described in subdivision 2, paragraph (g), 
  3.15  clause (1), item (ii), but not community services described in 
  3.16  subdivision 2, paragraph (g), clause (1), item (i), only 
  3.17  contributions used to provide the services described in item 
  3.18  (ii) qualify for the credit. 
  3.19     Subd. 4.  [LIMITATIONS; CARRYOVER.] (a) The credit allowed 
  3.20  to any taxpayer under this section may not exceed $250,000 for 
  3.21  any taxable year. 
  3.22     (b) The credit for the taxable year shall not exceed the 
  3.23  tax imposed on the taxpayer for the taxable year under section 
  3.24  290.06, subdivision 1 or 2c, reduced by the sum of the 
  3.25  nonrefundable credits allowed under this chapter. 
  3.26     (c) If the amount of the credit determined under this 
  3.27  section for any taxable year exceeds the limitation under 
  3.28  paragraph (b), the excess shall be a credit carryover to each of 
  3.29  the five succeeding taxable years.  The entire amount of the 
  3.30  excess unused credit for the taxable year shall be carried first 
  3.31  to the earliest of the taxable years to which the credit may be 
  3.32  carried and then to each successive year to which the credit may 
  3.33  be carried.  The amount of the unused credit which may be added 
  3.34  under this paragraph shall not exceed the taxpayer's liability 
  3.35  for tax less any additional credit under this section for the 
  3.36  current taxable year. 
  4.1      (d) The total credit allowed for all taxpayers is limited 
  4.2   to $10,000,000 in any fiscal year.  A neighborhood organization 
  4.3   must notify the commissioner of revenue within five days after 
  4.4   the end of each month of the total amount of all contributions 
  4.5   eligible for a tax credit that have been received by the 
  4.6   organization during that month.  When the commissioner has 
  4.7   determined that the aggregate amount of contributions eligible 
  4.8   for the credit received by all organizations during the calendar 
  4.9   year has reached $10,000,000, the commissioner must notify all 
  4.10  organizations that no additional credits are available for that 
  4.11  taxable year.  Contributions that would have qualified for the 
  4.12  credit, except for the fact that they were received after the 
  4.13  $10,000,000 limitation had been reached, will be eligible for 
  4.14  the credit in the subsequent taxable year. 
  4.15     Sec. 2.  [EFFECTIVE DATE.] 
  4.16     Section 1 is effective for taxable years beginning after 
  4.17  December 31, 1997.